Agriculture damages from wildfire estimated at $21 million

Lost grazing on burned out grass, replacement fences and damaged stock facilities all add up in the economic losses.

Posted
Wednesday, March 22, 2017 6:00 pm

AMARILLO – Early estimates of agricultural losses due to the recent wildfires are $21 million, but that could change as producers make final reports of their actual damages in the coming weeks, according to a Texas A&M AgriLife Extension Service economist.

“The assessment of acreage burned is about all we have a good estimate on at this time,” said Dr. Steve Amosson, AgriLife Extension economist in Amarillo. “There are a lot of losses, and we just don’t know all of them at this time.”

Based on current information, Amosson said the loss estimate of $21 million does not account for any loss of equipment. The basic categories considered are: lost pasture, $6.1 million; fence repair or replacement, $6.1 million; buildings and corrals lost, $3.8 million; livestock death losses, $4 million; and emergency hay and feed, $1 million.

“Every individual rancher will weather these losses differently, depending on what their financial position was at the time of the fire,” Amosson said. “If they had large losses and already had a marginal financial position then it could put them out of business, but in most cases it will just create more financial stress for them, and they will keep ranching.”

For many ranchers, little insurance money will come into play, he said.

“Typically, not much is insured except for ranch houses, sometimes major buildings and once in awhile the cattle,” Amosson said.

But there are some programs designed for this specific purpose that may help them offset losses such as the 2014 farm bill Livestock Indemnity Program, he said. Eventually, livestock losses are required to be registered with the U.S. Department of Agriculture Farm Service Agency in order to receive partial compensation.

With proper documentation, this program can compensate ranchers for 75 percent of the market value of cattle lost in the fire until the preset loss limit for a producer is reached, Amosson said. Additionally, a portion of fencing replacement costs may be covered through the USDA’s Natural Resource Conservation Service Environmental Quality Incentives Program.

While the current estimate is about 2,500 cattle lost as a result of the wildfire, Amosson said that number is expected to climb as more animals succumb to severe fire-related injuries. Other animals are being sold to packing plants, depending on how badly burned they were, he added.

“When we value the deaths of cattle at market value, including disposal costs, we’re talking about $3.6 million at this point, and I expect that to go up,” he said. “We’re still dealing with chaos. They’re still trying to find cattle.”

So far it will cost roughly $6.1 million to recover about 480,000 acres of pasture burned, which has to be set aside for the rest of 2017, Amosson said.

“Basically, ranchers will not be able to graze these pastures this year and will only be able to stock them at half capacity next year while they recover,” he said.

Amosson estimates the second major expense tied to the fires will be about $6.1 million to replace and repair fences in the northern Texas Panhandle that were either destroyed by the fire or from cattle trampling them to escape the blaze.

“An estimated 975 miles of fence were affected,” he said. “We are assuming that half will be repaired at a cost of $2,500 per mile, and the other half will have to be replaced at a cost of $10,000 per acre.

“I expect the amount of fence that has to be replaced to rise once they start to repair it and if the wire is too brittle to be effective due to the heat, therefore, this loss will increase,” Amosson said. “The total amount that will have to be replaced versus repaired will not be known for some time.”

The longer term impact to the cattle industry in the most affected areas is trying to figure out how the remaining 13,000 to 14,000 cattle in the path of the fire will be fed because of depleted grazing land, he said.

“Initially, ranchers are being provided donated hay and feed that has come into three Livestock Supply Points if they choose to use it,” Amosson said. “But long term, they will have to make a decision to buy hay for a long period of time, send the cattle to market or lease pasture elsewhere.”

The estimated $1 million in feed costs was calculated based on 30 pounds consumption per day per animal for a 60-day period for cattle in the fire area, he said, with the expectation they will either be moved or sold by the end of that period.

Amosson said one of the hardest figures to determine is on assets such as corrals, equipment and outbuildings.

“While undoubtedly losses have occurred, no firm tally of these has been made to date,” he said. “However, with an estimate of 125 structures lost throughout the three fire regions, that loss is expected to be in the neighborhood of $3.7 to replace. At this point we have no idea as to how much equipment has been damaged.”

Amosson said he did not figure the losses from the 2006 Panhandle complex fire, which according to the Texas A&M Forest Service is considered the largest fire ever in the state of Texas, burning 907,245 acres.

However, he said due to increased costs and cattle prices, he estimates the total damage would be about 70 percent of the 2006 fire.